By Globalization PartnersJuly 2015
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We may think of the United Kingdom as the country most similar to our own, perhaps because we gained our independence from them so long ago. However, the labor law and employment practices are significantly different. Keep the following in mind when negotiating the terms of an employment contract or offer letter with a potential candidate.
National Insurance: National Insurance is the UK’s social security program, by which all employers and employees contribute to the public health care system. Primary employee statutory benefits are provided through the employer’s portion of the National Insurance Contribution (NIC), which is usually 14.1% on top of the employee’s total compensation. For US companies hiring in the UK, it is important to know that UK/EU insurance plans carry exclusions on coverage while an employee is in the US. We strongly recommend ensuring that your employee is covered under a travel insurance policy if you plan to have him or her travel across the pond on a regular basis.
Vacation: Full-time employees are entitled to 28 days of paid vacation per year, which is also known as statutory leave entitlement or annual leave. There are 8 public holidays (also known as bank holidays), and while these do not have to be given as paid leave, it is customary to do so. However, an employer can choose to include these in the 28-day entitlement.
When hiring in the UK it is important to also keep the following employment details in mind:
- EU Data Protection, under which an employer is legally required to keep an employee’s personal data secure. Failure to comply can mean stiff penalties, so it’s important to understand the requirements
- Stock option planning: Avoid granting options if you can or consider carefully before you grant options; the paperwork is not simple and it is easier for small companies to avoid altogether
- Non-compete legislation is much friendlier to employees than is typical in the US.
- It’s much harder to terminate in the UK than it is in the US; we recommend making sure that employment paperwork is well-managed from the outset to avoid issues down the road.
Please don’t hesitate to contact us if you would like to learn more about hiring in the UK or talk to us about lifting the burden of international hiring off your shoulders entirely.